Many businesses, especially startups, experience cash flow challenges at times. However, these companies may still need to purchase equipment to keep the company running or expanding. Even old equipment is costly to repair or replace. Therefore, many owners are looking into equipment leasing as a possible alternative to replacement or repair. If you own a business, consider the benefits of leasing your equipment.
Cost Savings
Your equipment lease payments include every cost you may encounter with the machinery. For example, your installation and setup, repairs, and maintenance are all paid for. Some companies even offer training. If you purchase equipment, you have to pay for shipping, installation, and training. You also have to pay for maintenance and repairs when they are necessary. In addition, most banks will not finance anything except the actual cost of the equipment. The initial expense of your lease is also much lower. You probably won’t even be required to make a down payment.
Tax Incentives
When you purchase equipment for your company, the IRS allows you to depreciate the machinery over time. This means that you have to pay a lump sum or make payments, but you do not receive immediate tax benefits. Fortunately, lease payments are considered operational expenses, and are, therefore, fully tax-deductible. They are considered a business expense. Taking these payments off your taxes reduces your taxable business income, so your tax bill is reduced.
Easily Upgraded
As you know, technology is moving so fast that new equipment is often obsolete soon after, if not before, it is installed. However, when you purchase equipment, you are stuck with the machinery you purchased. You cannot typically upgrade your assets unless you purchase new, updated versions, but if you don’t, you could be placing yourself behind your competition in efficiency or quality. When you lease equipment, your sign for a specified period, such as one or five years. When your lease is over, you can upgrade your equipment easily.
Increased Flexibility
When you purchase equipment, the cost can make it difficult to expand and contract your production or service capabilities easily. Your purchase is also typically final once you begin using the machinery. However, leased equipment can make your business much more flexible. Not only can you incorporate flexibility into your lease so you have lower payments, longer terms, or upgrade options, but you can also expand and contract your production easily. Equipment leasing is especially beneficial for seasonal businesses.Â
Seek Expert Assistance
You are the only one who can determine whether you should lease or purchase your equipment. Consider both the advantages and disadvantages of an equipment leasing contract. The equipment financing and leasing options from Synergy Commercial Funding are designed to give your business the machinery it needs to thrive.
Are you looking for financing options for your business? If so, Synergy Commercial Funding is ready to help. We offer a wide range of commercial finance services to help businesses of all sizes achieve their objectives, whether it’s purchasing new equipment or purchasing a new commercial property.
Interested in creating a second line of income just by talking with your existing network? Want to help the economy grow by helping businesses around you grow? Think about becoming a Synergy Commercial Funding Partner. Visit our "Referral & Broker Program" to learn more.
